Photographer: Kevin Frayer/Getty Images

China Said to Consider Aid Package for Struggling State Firms

  • About 10 SOEs said to be considered for government plan
  • SinoSteel said to be among SOEs that may receive help

China is considering providing about 10 of its state-owned enterprises with an aid package, people familiar with the matter said. Sinosteel Corp. is among those that may receive help, one of the people said.

QuickTake China’s Pain Points

The government is considering options such as asset or equity transfers, takeovers and preferential policies, the people said, asking not to be identified because the discussions haven’t been made public. The proposal is still being discussed, the people said.

Should the plan be approved, it would mark the government’s latest effort to provide relief to its state firms, many of which are struggling with overcapacity and slumping demand as the economy grows at its slowest pace in a quarter century. SOEs have seen their profits drop by about 10 percent during the first five months of the year, extending last year’s slump.

Among the measures being considered, state-asset management firms such as China Chengtong Holdings Group Ltd. and China Reform Holdings Corp. could take over struggling SOEs, according to the people. In another option, weaker SOEs would receive assets or equity from healthier SOEs, the people said.

The State-owned Assets Supervision and Administration Commission, which is in charge of overseeing SOEs, didn’t immediately respond to a request for comment. Representatives at the state asset managers and Sinosteel, the country’s largest steel trader, either didn’t immediately respond to queries or weren’t available to comment.

Sinosteel Engineering & Technology Co. shares rose 3.3 percent in Shenzhen trading to 13.65 yuan, the highest close since mid April.

Steel is among industries struggling with gluts that China is seeking to reduce. Provincial governments must set capacity reduction targets by July 15 and submit detailed phase-out plans by the end of this month, the official Xinhua News Agency reported, citing Xu Shaoshi, chairman of the nation’s top economic planner. Failure to stick to capacity cut plans or missing targets will be “seriously punished,” Xu was cited as saying.

— With assistance by Keith Zhai, Heng Xie, and Steven Yang

Before it's here, it's on the Bloomberg Terminal.